The first thing the Government must do is bring the oil firms under control

'A windfall tax should be placed on the petrol companies, whose profits have doubled'
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During a crisis, one does not generally have the luxury of dealing with secondary issues. In last week's clash over fuel, therefore, I had no doubt that I was on the side of the Government against forces whose character I will explain below. But this does not mean that the Cabinet had not itself half-created the crisis, and was, for the same reasons, incapable of dealing with it adequately.

During a crisis, one does not generally have the luxury of dealing with secondary issues. In last week's clash over fuel, therefore, I had no doubt that I was on the side of the Government against forces whose character I will explain below. But this does not mean that the Cabinet had not itself half-created the crisis, and was, for the same reasons, incapable of dealing with it adequately.

First, the overall picture. Throughout last week, Transport for London and my office were in continuous receipt of detailed police reports on the situation at oil depots - the same information, on a wider scale, was obviously available to the Government. All week there was not a single picket or protest on a scale capable of preventing oil deliveries. In most cases, the number of protesters was pathetically small - sometimes in single figures. The largest scarcely ran into a few hundreds. The police, who have handled thousands of miners, or city rioters, could have cleared such tiny gatherings in a matter of minutes.

Furthermore, in all cases I know of where they were asked to do so, the police did clear them -I do not blame them in any way for last week's events.

There was, in short, no serious force preventing the oil from leaving the depots, no significant "Poujadist revolt". If the trucks did not leave the depots it was because someone inside did not want them to.

Neither is it difficult to work out who. If the trucks had been prevented from leaving by protesters, that was either obstruction of the highway, or secondary picketing. Both are illegal, and pickets/protesters could have been removed with small effort.

If drivers were refusing to take out shipments, they were either violating company decisions, in the case of employees, or contracts in the case of self-employed drivers. The first would have been an illegal industrial dispute as there had been no strike ballot, and the second was breach of contract, justifying the termination of such contracts. Yet no oil company either applied for relief from illegal industrial action or, in any case that has been publicised, terminated a contract.

There is, therefore, only one coherent explanation. That certain companies did not want the oil sent out. Britain was, in short, faced with a strike by a number of oil companies.

That was the analysis Transport for London acted upon to secure essential supplies for the capital's transport system via the central emergency centre it set up to deal with the crisis. Its policy was totally clear. It would not wait for transport operators to pressure the oil firms but would publicly name any companies refusing to deliver to London's essential transport services.

As an oil company strike is, evidently, not something that can be publicly announced, even within a firm, we anticipated, and met, a very diverse response. Some companies locally and/or nationally co-operated fully from the beginning in getting essential supplies to London's transport system - its buses being the key link in the chain once London Underground had secured its essential supplies. Others suffered strange "administrative delays" in co-ordinating their activities with Transport for London - which we responded to by making it quite clear that we would publicly name the companies.

Either through company co-operation, or by making it clear that we were prepared to go public where there were problems, in every case Transport for London succeeded in unblocking supplies. Although regrettably we had no powers to do anything for private motorists, no bus services ceased running, apart from a few in east London temporarily on Wednesday morning as the crisis started - although there was a reduced service on some routes. Transport for London's team served the capital well.

The arithmetic of last week's national events was also simple. Tax on oil has gone up by 2.3p per litre since the beginning of the year. The Government has also received increased revenue from North Sea production. This windfall effect should not have been permitted - the Government should not be seeking extra income, above budget projections, from the oil price increase. But there was no justification for the 7p, or even 11p, demands for reduction in prices made by various organisations during the week. These were clearly designed to allow oil companies to put up prices under cover of a tax reduction - a policy that became transparently obvious when Esso and other companies attempted a price increase on Friday.

However, the Government left itself open to this trap, and was unable to deal with it satisfactorily, due to underlying mistakes in policy. Most importantly, it has maintained one of the most socially regressive aspects of the Thatcher government's policy - the constant shifting of the burden of taxation from direct to indirect taxes. When protesters pointed out that Britain has the highest oil taxes in Europe, this is just an expression of such a policy.

Second, while the Government evidently knew perfectly well what was taking place, it did not explain the situation bluntly - that what was being confronted was not disruption of vital supplies by protesters, but by certain oil companies. Without that accurate expression of the situation, the Government could never win over public opinion.

The correct policy is twofold. First, the Government should carry through with reported proposals placing oil companies on the same statutory footing as gas and electricity suppliers, who are legally charged with getting supplies to essential services in the event of a crisis. The Government should also make clear that next time, it will name the companies responsible for the disruption and the knock-on damage to both the economy and the public.

Second, the Government should start to reshape its tax policy to shift the balance from indirect to direct taxation. Petrol duty should be reduced by the amount necessary to eliminate windfall revenue this year - 2.3p a litre plus the extra revenue from North Sea Oil production. A windfall tax should be placed on the profit of oil companies - whose profits have doubled. This would allow a further reduction in petrol prices as well as making the situation clear. The Government should also admit that the Liberal Democrats are right and introduce a 50 per cent rate of tax on incomes over £100,000 a year.

The Government certainly walked into a trap. But one that its previous mistakes had played a very significant part in laying.

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